The good news is that Ryne's cancer is in retreat. He's in remission and back at college. But the illness has left the family destitute.

Chris Hansen: And how much outstanding medical debt do you figure you have as we sit here today?

Vicki Herrington: $100,000.

Chris Hansen: $100,000?

Vicki Herrington: Uh-huh.

Halfway across the country in Minnesota, the Snyder family is in economic freefall for another reason: job loss.

Chris Hansen: How stressful is this for you?

Chriss Snyder: It's very stressful. You think about it every day.

Chriss's husband Matt, a plumbing contractor, was recently laid off. Getting by on her one salary has them hanging by a thread.

Chriss Snyder: You're robbing Paul to pay Peter. What can I pay out of this check? And what's gonna have to wait till the next check?

Credit cards are now a lifeline for the Snyders as they desperately try to stay afloat. Like so many victims of the economic crisis, they are also struggling to hold onto a home that's worth less than what they paid for it.

Chriss Snyder: The house across the street is for sale for a hundred thousand less than what our house is mortgaged for.

Harvard's Elizabeth Warren says that too many Americans today are like the Snyders and the Herringtons: accumulating debt, not wealth.

Chris Hansen: Should we feel sorry for people who are buried in credit card debt?

Elizabeth Warren: To me, it's not about feeling sorry. It’s about understanding the economic realities. The median American family has tried to hold on to an American Dream that their parents could easily afford on one income, and today's family can't pay for on two. They need to make it to the end of this month. And if plastic is the way to do that, that's what families have been doing.

And that means more and more families are sinking deeper into financial quicksand.

Vicki Herrington: All of this is very overwhelming, to know that you may never ever, ever, ever, see the bottom.

Chris Hansen: How long is it gonna take you at this rate to pay off that credit card?

Chriss Snyder: I'm on the lifetime plan at this point. I'll probably be retired.

So who's profiting from this lifelong cycle of debt? We'll show you how the credit industry makes debt pay.

Elizabeth Warren: The credit card companies have put the loan sharks out of business.

And, we'll go inside the debt collection business to see how far some will go to get a piece of the action.

Generations ago, borrowing money was a privilege. A credit card was hard to come by, and anyone fortunate enough to have one was expected to pay the money back. But all that's history now.

Until the recent financial crisis, easy credit was everywhere. And the credit card industry spent billions to make plastic a way of life - and to persuade us that credit was smart way to buy the things we deserve, even if we couldn't afford them.

Chris Hansen: Do you ever regret having these credit cards in the first place?

Chriss Snyder: Oh, definitely. Oh, gosh, every day.

Chriss and Matt Snyder's financial problems are typical. What was once a nation of savers is now a nation of debtors - borrowing money for everything from cars to college. And even before the unemployment rate soared, nearly half of American families were carrying credit card debt, with average balances of more than $7,000.

Harvard's Elizabeth Warren says many Americans have gotten used to living on the float - and in the process, the credit card companies have thrived.

Elizabeth Warren: There is profit to be made in debt. Not profit for the family, but profit for the people who hawk it.

And Warren says this was no accident. Nearly three decades ago, in a move to boost profits, credit card companies lobbied the government to get rid of caps on interest rate.

Then they made billions by lending to just about anyone, profiting from charges described in the fine print of those credit card contracts that even Warren - a Harvard Law professor - can barely understand.

Elizabeth Warren: Credit card contracts have grown from about a page and a half in 1980 to more than 30 pages in the early 2000s. And let me just be clear. That additional 28 and-a-half pages did not help the customer. It's tricks and traps and trailing interest and pay to pays and a whole bunch of things that literally didn't exist 25 years ago.

The Snyders were carrying a big load of credit card debt even before Matt lost his job. Now they can barely make the minimum payments and are falling behind at warp speed.

Chris Hansen: So, more than half of your payment is going to the interest?

Chriss Snyder: Yes. There's a finance charge, $140. And the payment was $220.

Chris Hansen: So, you're at 19 percent there?

Chriss Snyder: Yeah. I couldn't pay it before. I certainly can't pay it now when you add on more fees and higher interest rates.

But Warren says that's exactly how credit card companies have been making a big chunk of their profits.

Elizabeth Warren: They're not looking for customers who can pay off credit cards. They're looking for customers who will hit the sweet spot, fall into the tricks and traps, and incur a $45 fee, 19 percent interest rate, a 29 percent interest rate after that is just profit, profit, profit, profit, profit.

Chris Hansen: What you describe sounds like loan sharking, which is illegal. Why isn't this illegal?

Elizabeth Warren: That's the best part. The credit card companies have put the loan sharks out of business. The kinds of interest rates that some credit card companies are charging would make Tony Soprano blush.

Nessa Feddis: Riskier borrowers pay more for credit just as riskier drivers pay more for car insurance.

Nessa Feddis is an attorney with the American Bankers Association, the industry trade group. GE Money, a unit of NBC's parent company that's in the credit card business, is a member.

Chris Hansen: Why has the industry fought so hard against any kind of regulation when it comes to interest rates?

Nessa Feddis: Well, history has shown if you cap interest rates, people pay more for credit, and fewer people have access to credit. We have supported regulation that makes consumers understand what they're getting.

President Obama recently signed into law a landmark credit card reform bill that includes restrictions on some fees and on on how banks go about changing customer's interest rates.

But even with the new rules, banks can still ultimately charge whatever rates they see fit.

Nessa Feddis: It's an unsecured loan, which means there's no collateral. There's no house, no car, which is used to encourage people to make payments. It’s the riskiest type of loan.

While credit card lending has returned steady profits for decades, the industry is bracing for unprecedented losses this year. Defaults are on the rise among families like the Snyders, who filed for bankruptcy after months of financial desperation.

And for those still struggling with unpaid bills? Well, the credit business has spawned another multi-billion dollar shadow industry ready to take over: Debt collection. And some say the recent tough times are leading to vicious collection tactics.

Some harass, others threaten.

Elizabeth Warren: This is an industry that makes its money by being out of control. Pay it or your life becomes a living hell.

For Donna Lundon and Greg Bjerk of northern Minnesota, getting calls from debt collectors was something that happened to other people.

But when the economy began slowing down in their small town, Donna's cosmetology business dried up. And one maintenance worker's salary wasn't enough to support 3 young children. They used a store credit card as a safety net.

Soon they fell behind - and got trapped in the common cycle of credit-card debt. With late fees and a 25 percent interest rate, the balance ballooned to $9,000 and they could no longer even make the minimum payments.

Donna Lundon: It's very humiliating.

Once they stopped paying the bill, the store hired a debt collection agency - Academy Collection Service - to take over.

Greg Bjerk: They were calling our house at least ten times per day.

Like most collection agencies, Academy works on commission, so there's an incentive to be persistent. But there's also a federal law to protect consumers from overly-aggressive collectors. For example, a debt collector can't call late at night, lie, swear, or tell anyone about the money you owe. The idea is to protect consumers from harassment.

The calls kept coming for months, all through the Christmas season. When the phone rang on Dec. 31, Donna thought it was more of the same.

Donna Lundon: When I seen it on the caller ID, I didn't even get up to answer the phone ‘cause I was nursing my baby. I was going to let it go.

But when Donna listened to the message a few hours later, she froze. This was a collection call like none she had heard before.

DonnaLundon: As a woman, that's gotta be one of the most terrorizing things you could ever hear.

When Greg got home, they immediately called the police.

Officers confirmed the call came from Academy Collection Service and referred the case to local prosecutors, citing illegal telephone harassment. But no charges were ever filed against the company.

DonnaLundon: I don’t understand why people could do this to me, or to anybody. This is not a good thing. You can't, you cannot do this to people.

Pete Barry: It would be hard to-- to surprise me with anything a debt collector could do to collect a debt.

Attorney Peter Barry has sued hundreds of debt collectors and represents Donna and Greg in a federal lawsuit against Academy Collection.

Chris Hansen: Why would a debt collector leave a message saying, "Have you ever been raped?"

Pete Barry: To stir up emotion.

Barry says that in tough economic times, some collectors turn to more abusive tactics to earn their commissions. The Federal Trade Commission reports that it gets more complaints about debt collection than any other industry.

Pete Barry: I've seen everything from physical threats, profanity, threats to the workplace.

Chris Hansen: But isn't the reality that if people pay their debts, they wouldn't put themselves in a situation where they could be potentially abused by a debt collector?

Pete Barry: Sure. Debt collectors are entitled to collect what's due and owing to them. But consumers have a right to be treated with truth, fairness, dignity and respect."

Rozanne Anderson is the lead attorney for ACA International, the nation's largest debt collection industry trade group. We asked her about that message allegedly left by someone at Academy -- a member of her organization.

Rozanne Andersen: That is insane. That-- that is ludicrous. That has nothing to do with debt collection. If any one of our members-- actually had to face me and say, "Oh, sure, we do that all the time," I would be shocked, and I probably wouldn't be sitting here representing the industry.

In a letter to Dateline, a lawyer for Academy Collection acknowledges that the call was placed by a employee who has since resigned. Calling the message "offensive" and "inappropriate" he says Academy "does not promote... or tolerate abusive conduct."

But in fact, Academy has a history of violations. The federal government recently sued the company and Academy paid fine of more than 2 million dollars for what prosecutors called "harassing and abusive tactics."

Chris Hansen: Whether it's correct or not, debt collectors have this image of phoning at all hours, harassing people. Where do you think that image came from?

Rozanne Andersen: I know that it's outdated in terms of a stereotype. But I also know that it came from the bad acts of a few.

Chris Hansen: So, you would say this is a minority of the debt collectors getting a majority of the attention?

Rozanne Andersen: Absolutely.

So do most collectors follow the rules, as the industry spokesperson says? Or is breaking the law standard operating procedure?

Coming up, we talk to a group of people who make collection calls for a living... and bring our hidden cameras along.

More than six million people have lost their jobs since the recession began, and the debt collection industry is busier than ever.

Rozanne Andersen: There's no question. The- it is at an all-time high.

Rozanne Andersen, who represents industry trade group ACA International, says contrary to its predatory reputation, the debt collection business plays an important role in the nation's economy.

Rozanne Andersen: The collection industry returned $40.4 billion to U.S. businesses in 2007.

But there's another part of the industry that collects billions, even though it sometimes flies under the radar. When a traditional collection agency can't recoup money for a retailer or credit card company, those businesses often sell the delinquent accounts to debt buyers-- usually for pennies on the dollar.

These debt buyers are then free to collect, and keep, whatever they can.

Harvard's Elizabeth Warren says there's big money to be made in this second level of debt collection. There's also less oversight and the greatest potential for abuse.

Elizabeth Warren: So the second level tends to be the pay it or your life becomes a living hell.

One company that's tapped into the business of buying second hand debt is LHR, recently named one of Inc. Magazine's fastest growing companies.

LHR's corporate slogan suggests it's a cut above the typical collection agency, one of the good guys.

“LHR: The right way.”

But Army Sgt. Charles Houston and his wife LaTonya don't see it that way.

It started with a car loan from 2001. Six months into the loan, after LaTonya had emergency surgery and lost her job, she voluntarily returned the car to the financing company.

LaTonya Houston: We thought, okay, this is it.

Chris Hansen: This was done.

LaTonya Houston: Yes.

But seven years later, Charles, an Iraq war vet, got a surprise call from someone claiming to be an "investigator." The caller told him they still owed the full $11,000 for the car. The case, he said, was now a military matter.

Charles Houston: And they was gonna start some actions on me, have me put out of the military.

Chris Hansen: Put out of the military?

Charles Houston: Yes.

And there were follow-up calls made to his wife.

LaTonya Houston: Well, yeah, he told me he was a military liaison.

Chris Hansen: He was treating this like a criminal matter? And did you buy it?

Charles was worried. The family budget was already stretched to the limit on his soldier's salary.

But his wife had her doubts. So she googled the "military investigator's" phone number.

LaTonya Houston: And it turned out to be LHR.

Chris Hansen: The debt collector.

LaTonya Houston: The debt collector.

The Houstons sued LHR and got a financial settlement, though the company didn't admit any wrong-doing. But we wondered, were the LHR collectors who the Houstons encountered rogue employees tarnishing an otherwise reputable company? Or is ignoring the rules all in a day's work? To find out, we visit an after-work hangout for LHR collectors near Buffalo, N.Y., and-- wearing a hidden camera-- ask about job opportunities.

TinaErdley (on hidden camera): I like it. It's good money. It’s challenging. It’s a good job.

This collector, Tina, says that after a couple weeks in training, she quickly rose through LHR's ranks.

TinaErdley: I was actually promoted within four weeks to the senior side of what I do. I do collections.

She gives us a sample of her official-sounding "talk off" - the rap she uses with consumers. It sounds designed to make them think a lawsuit is on the way.

Tina Erdley: But once you get on the phone and are actually talking to somebody, you kinda say what you need to say.

Another LHR employee, Joe, says some of his co-workers follow the rules. Others... not so much.

Joe: When you're starting off you have to be very, like, a lot more reserved. But once you've been in there, once you get promoted and like on team you can bend the rules a little bit more.

Joe says he "walks the line" most of the time, but also knows how to cross it - with a tactic that sounds like harassment

Joe: One of the things that I like to do, which is pretty nasty though, is that I'll find out where somebody works and then I'll find out who the owner of their company is, find out their number and call them at home. I love that. Call the boss at home. That's my favorite thing to do.

And remember how that other LHR collector passed himself off as a military liaison?

And among this group, there seems to be little fear of getting caught.

Sarra-Jane: And are you kind of allowed to say what you want kind of thing? Are you given a free reign?

Man: You can't, you can't swear. And you can't threaten people. But, like, we do every day.

So, why would they risk breaking the law and inviting law suits, like the one filed by the Houstons?

Sarra-Jane: Does the company ever get sued though?

Man: Oh yeah, oh yeah.

Sarra-Jane: Oh yeah?

Man: The thing is, though, is that they get, we bring in a lot of money so it's like it’s worth it for people to still be illegal and collect money.

LHR didn't respond to our requests for comment, but after seeing some of our hidden-camera video, the company said it terminated the employees involved. It called their statements unacceptable and not representative of what they train their collectors to do.

But Attorney John Fugate, who represents the Houstons, says what we heard on hidden camera is common throughout the industry.

John Fugate: Paying off these lawsuits is just a part of doing business for many of these companies. It's more profitable in many cases for them to break the law than it is to abide by the law.

Skirting the law may be commonplace... but what happens when collectors take it a step further and pose as law enforcement?

Jay: You said you were an officer?

Detective: I work with the Bethesda, Md. police department, sir.

John Fugate: They're using mafia-like tactics.

Next, we listen in to an alarming collection call as it happens.

“You need to give him a call otherwise we're gonna have you picked up.”

Some debt collectors admit that breaking the law pays off. But how far will some collectors go? Our investigation led us to an operation that some say looks more like organized crime than debt collection.

"Investigator Hoffman" told her the warrant had to do with an old $800 debt. Pay up — even just half — or else.

Vicki Herrington: He said, "I was issued a warrant," and they were gonna arrest me. So—

Chris Hansen: And take you away in handcuffs?

Vicki Herrington: Uh-huh. So I got off the phone, and I cried. My son was scared to death that I was going to jail for something that I didn't even know anything about. We really didn’t know what to do or who to turn to.

Across the country, in Texas, another couple was getting similar calls with the same frightening news... so frightening they still worry and asked us not to use their names. Last summer, they were expecting, with twins, when the messages started coming.

“You might as well pack your bags and grab your coat because the sheriff is coming to pick you up.”

Like the Herringtons, they were told a warrant had been issued over an old credit card debt that the couple says was paid off 12 years ago.

“I've had four felony charges placed in my office against you.”

And it sure sounded like the police were already on their way.

Hoffman: We have requested forcible entry, if necessary. I need to know whether or not there are any weapons on the premises, ma'am .

Husband: So, it was like frantic, grab the dogs, grab some food, grab some clothes, let's get out of here.

Frightened and hiding in a hotel, the couple called a lawyer, John Fugate, for advice. Fugate suspected it was a debt collector posing as law enforcement, and he urged them to keep the conversation going.

JohnFugate: Most of the collection agencies that engage in this type of tactics will deny that they ever engage in those kind of tactics, so a tape recording is always good evidence.

They invite us to listen in as they call the alleged "investigators" back.

Collector: My name is Investigator Laura James. We've been tryin' to locate you, sir, in regards to this warrant we have here.

The first woman they speak to says it's urgent they call someone named "Hoffman" if they want to avoid being arrested. That's the same name used by that so-called "investigator" who called the other couple, the Herringtons.

And they were given an address for this attorney, which led us here, to Depew, N.Y., just outside of Buffalo, which happens to be a national mecca for debt-collection companies. Could this be the law office of attorney Andrew Brzyski? Well, records show -- there is an Andrew Brzyski and the house is actually owned by his parents. But we couldn't find any record that Andrew Brzyski is licensed to practice law in New York -- or anywhere else. So he may not have a law license, but he apparently has a driver's license, and this car, which we tracked, here to an office building in Buffalo. Could this be "attorney" Andrew Brzyski? And is this where those threatening phone calls are coming from?

Hoffman: If you don't want to pay sir, that's fine. I'll just have to have you picked up.

The calls are threatening unsuspecting people across the country - pay this old debt or get thrown in jail. But that's not true. The calls aren't coming from cops in Maryland. Instead, we linked them this building in Buffalo, N.Y.

With hidden cameras, we follow signs to an office with an official sounding name: Final Claims Asset Locators. We're able to walk around inside for a few minutes, and see one person after another working the phones. And we hear this snippet of conversation.

Rhonda: There is going to be a detainer, sir, where you'll be brought to Maryland to face charges here.

It's the same kind of threat we heard on the phone down in Texas. She's talking as if she's with law enforcement.

Rhonda: So what we'll do is, we're going to have you picked up.

And her voice sounds awfully familiar, too.

Rhonda: Otherwise, they're gonna have you picked up.

Looks like we're in the right place. And remember the so-called attorney named Andrew Brzyski? Here's the same guy we've seen driving around in a car registered to Andrew Brzyski.

Could this be money wired from people who were tricked into thinking they were about to be arrested? People like the Texas couple who fled their home in fear... Or Vicki Herrington, who got those threatening calls in the wake of her son's cancer treatment? We watch the cash come in. So we decide to follow the money and find out who's behind the company that calls itself Final Claims Asset Locators.

We trace the firm to this man - Tobias Boyland - and find out his business seems to be operating under other names as well.

And he appears to have another enterprise going. In this video posted on the Web, Boyland goes by the nickname "Bags of Money," and apparently fancies himself some kind of show-biz entrepeneur.

Boyland: I didn't realize so many beautiful women in town really just wanna to do their thing. I have to create a vehicle for them to do their thing!

And check out this van, a company car, emblazoned with the words "Thug Motivation" — perhaps a fitting slogan when you consider that Boyland is a convicted felon. He and company co-founder, Dorian Wills, served time in prison for armed robbery before opening their debt collection business. That may seem surprising, but it's not to attorney John Fugate.

Chris Hansen: So there's nothing to check the background of somebody who wants to go out and buy large amounts of debt which include people's very private financial information.

John Fugate: That's right. Anybody with two nickels to rub together can buy a debt portfolio and set up and start collecting the debts.

Boyland's operation is legally incorporated, and we obtained documents showing he's been in the debt-buying business for years. But Final Claims Asset Locators is not a member of the industry trade group.

We wanted to learn more about Boyland. We track him to this house in a rundown Buffalo neighborhood. In the driveway-- a shiny black Hummer, another company car.

We follow him as he drives the Hummer around town, on fall mornings, and snowy winter days. He seems to have plenty of time on his hands. We watch him run errands, visit the dentist, eat lunch at a pancake house.

And occasionally, he stops by the office.

Back at the house, we decide to pay him a visit and ask about his debt collection business.

ChrisHansen: We got a big mean dog.

We hear people inside. But when we come knocking, no one answers the door. So we head over to corporate headquarters. We arrive to a busy office.

ChrisHansen: Hey, how are you? Chris Hansen with Dateline NBC.

And the first person we approach is this man, Dellian Sharp. He's a debt collection trainer for the operation.

ChrisHansen: I needed to talk to Mr. Brzyski or Mr. Boyland.

We later understand why he might have left so quickly. At the time we shot this tape, Sharp was awaiting sentencing on federal charges of bank fraud - apparently unrelated to his job here. He has since been sentenced to two years in federal prison.

Downstairs in the lobby, a few collectors stop to look at our videotape. And up walks the so-called company attorney, Andrew Brzyski.

ChrisHansen: Mr. Brzyski, Chris Hansen.

But he doesn't acknowledge the name...

ChrisHansen: Who are you, then?

Brzyski: I don't have to tell you anything.

…and won't answer our questions.

ChrisHansen: What I do want to know about some of the tactics used at this company. Where did you go to law school, Mr. Brzyski?

Brzyski: So you don't want to talk to me.

Apparently we're not the only ones raising questions. We found out that New York and federal law enforcement officials — including the FBI — have been given detailed information on Boyland and company. But so far, they're still in business. Police in Maryland, who are being used as a front by the group, aren't able to launch an investigation because the alleged crimes were not committed in their jurisdiction.

Baker: Bottom line is, I don't know that we are going to get them at all.

The debt collection trade group, which believes most collectors follow the law, says the industry is so vast it's virtually impossible to monitor each company.

Rozanne Anderson: We are trying to figure out ways to remove the bad actors.

But after seeing footage of our investigation, the trade group's chief attorney acknowledges that more needs to be done.

Chris Hansen: Is there a gap in the regulation? Is enough being done?

Rozanne Andersen: What we've seen today, I think the answer is clear.

Since our report first aired in March, some steps have been taken to crack down on debt collectors who violate the law.

Andrew Cuomo: This is one of those areas that cries out for more scrutiny and more regulation.

In New York, a national mecca for debt collection operations, Attorney General Andrew Cuomo has taken a series of actions.

Andrew Cuomo:

We are looking to stop the most egregious activity first.

Chris Hansen: What offends you most about the activity that you've seen?

Andrew Cuomo: You have all sorts of innocent people who've been caught in this web, who didn't owe anyone anything. They use these-- these terrible, aggressive, terrorist tactics that also happen to be illegal.

Remember LHR?

Rob: We bring in a lot of money, so it's, like, it's worth it for people to still be illegal.

The New York AG's office launched an investigation into LHR and nearly a two dozen collection agencies in the region.

And Final Claims Assett Locators? It was shut down in June, along with other debt collection operations run by Tobias Boyland. In an early-morning raid, police searched the offices where Dateline had gone looking for Boyland, investigators seized computers and dozens of boxes of documents.

At Boyland's home, police say they found a sizeable weapons cache, including an AK-47 rifle and a loaded semi-automatic pistol that police say he was carrying during the raid.

Boyland was taken away in handcuffs and pleaded not guilty to felony weapons possession charges that alone could land him in jail for 15 years or more if convicted.

Boyland was taken away in handcuffs and pleaded not guilty to a felony weapons possession charge that alone could land him in jail for up to 15 years if convicted.

Judge: Mr. Boyland, you do at least understand what you're being accused of, right?

In a separate legal action, the AG's office accuses Boyland and three other company officers of intimidation and extortion consumers in New York and throughout the nation have been abused and bilked.

Cuomo says his office is pursuing civil and criminal action against Boyland and company.

Andrew Cuomo: This is a company that was flagrantly violating the law. They were threatening. They were posing as law enforcement officers. They were intimidating. They were making money. People were paying to stop the terrorism.

Chris Hansen: Give me a sense for how much money Boyland and his crew were making.

Andrew Cuomo: Chris, at the end of the day, it's likely that they made millions of dollars.

Dateline wires the home of a volunteer, Jenny, from top to bottom with hidden cameras. Then she called repairmen to her house for a simple problem we created as a test with Jenny's pool. NBC's Chris Hansen reports.